Iceland’s Actavis – which was thwarted in its attempts to buy Croatia’s Pliva by Barr Laboratories – has carried on its acquisitive path, announcing its purchase yesterday of US specialty generics firm Abrika Pharmaceuticals for an initial price of $110 million, with an additional $125 million up for grabs over the next three years on good performance.

Just a few days ago, Actavis bought a majority stake in Russian manufacturing company ZiO Zdorovye. Russia is Actavis' seventh largest market, accounting for approximately 4% of annual sales, but having a local manufacturing arm will increase the company's ability to bid for state hospital supply contracts in a region that is witnessing a surge of interest as Western firms seek ways to slash their drug development costs.

In fact, sales of pharmaceuticals in Russia have more than tripled since 2000, and it is now one of the fastest-growing drug markets in Europe, with sales growth of around 10% a year between 2006 and 2010, according to figures compiled for PharmaTimes by PricewaterhouseCoopers.

Pole position for CR products

And this latest buy will push Actavis right up the leader board in the development of controlled-release products, with over 50 products in the pipeline and over 50 million euros expected to be invested in their development next year. Some 13 abbreviated new drug applications from the enlarged group are currently sitting with the US Food and Drug Administration, the company notes.

It could turn out to be very good fortune for Abrika’s founder, Alan Cohen, who formed the company in 2002 having previously been chief of Andrx Corporation. And, with nine ANDAs filed since inception, one product (isradipine) launched in the first quarter, first-to-file exclusivity on two products slated for introduction in the USA after 2007, at least three launches planned next year and five to six the year after, Actavis is probably thinking it too could be set to tread a golden path.

The market for CR products is somewhat more stable than for generics as a whole, it claims; reduced competition because of the complex manufacturing processes involved has led to more durable margins than in other segments of the US generics market. Abrika has forecast 2007 revenues of $26 million, rising to $45 million in 2008, with an EBITDA (earnings before interest, tax, depreciation and amortisation) margin of 40% for both years.

The transaction is expected to close in January 2007.